Small-Business Forum Looks to Ease Jitters About Affordable Care Act

Lack of public outreach in New Jersey makes it tough for business owners to grasp the details -- and implications -- of the ACA.

A forum in Newark led by U.S. Rep. Donald M. Payne Jr. didn’t settle all of the concerns New Jersey small-business owners harbor about the Affordable Care Act, but it made progress.

The 2010 federal law was written to spare small businesses from some of those worries, including penalties that employers with more than 50 employees must pay. Those penalties were recently delayed until 2015.

But owners of small businesses are troubled about the way the law will affect the cost of insurance, an apprehension that was raised at the forum held at the Leroy Smith Public Safety Building in Newark.

Dennis Gonzalez, regional executive officer for the U.S. Department of Health and Human Services, noted that small businesses would be able to purchase insurance through the federal insurance marketplace or exchange. Businesses with fewer than 25 employees with an average salary of less than $50,000 will be eligible for tax credits of up to 50 percent of the insurance costs beginning on January 1, 2014

“The beauty of it is that it’s very simple,” Gonzalez said of the marketplace, a point that federal officials have been making in the face of criticism about the health law’s complexity.

Employers will choose one of four levels of coverage for their employees. Bronze plans will cover 60 percent of health costs on average with employees covering 40 percent; silver will cover 70 percent; gold will cover 80 percent; and platinum will cover 90 percent.

A unique feature of the small-business marketplace is that employees will be able to choose their own plans, within the level of coverage chosen by their employers. For example, if an employer chooses to pay for silver coverage, its employees will be able to choose from any of the silver health plans offered by insurance companies, Gonzalez said.

Gonzalez said federal officials are hoping to announce which insurance plans have been approved for the marketplace in New Jersey some time in August. The marketplace is scheduled to beginning enrolling residents on October 1, with insurance coverage beginning on January 1, 2014.

Gonzalez noted that New Jersey has less funding for public outreach over the federally operated marketplace than those states that chose to operate their own marketplace. While New Jersey has $1.5 million for outreach this year, New York has $27 million for its exchange.

Gov. Chris Christie cited concerns about the potential cost to the state of operating the marketplace when he vetoed a bill that would have created a state-based exchange last December.

Dyana Tanasy, director of strategic initiatives for Horizon Blue Cross Blue Shield of New Jersey, noted that the Rutgers Center for State Health Policy estimated that the number of uninsured New Jersey residents will drop by 444,000, while the number insured by employers will drop by 151,000.

“I guess I would describe this as an unintended consequence of this law,” Tanasy said of the decline in employer coverage, adding that some employers may find it easier to allow their workers to buy insurance on the individual marketplace than to buy insurance for them.

Tanasy also noted the law will increase the benefits that insurance plans must offer, eliminate annual and lifetime limits on insurance coverage, and introduce several new taxes and fees.

“We don’t think that costs will come down over the next few years,” Tanasy said.

She also noted some complications related to the different definitions of small businesses under state and federal law. While state insurance regulations define businesses as being small if they have the equivalent of 25 full-time employees, the federal law has various provisions that affect businesses with 25, 50, and 100 workers.

“There are a lot of things to be wary of, especially for small employers,” she said.

She added, however, that there were strong reasons for employers to maintain coverage, perhaps the most important being the competition to recruit and retain talented employees. She said she spoke with executives with a North Jersey trucking company that saved money in the long term by offering more generous insurance than its rivals.

“I want you to think about the full picture and not just the immediate financial incentives that are at play,” she said.

Payne said he hosted the forum in July because he wanted to reach small business owners well ahead of the October launch of enrollment in the marketplace.

“This is just the start,” Payne said of public awareness efforts.

He acknowledged that some small business owners are concerned about the law. Earlier in the day, National Association of Independent Business State Director Laurie Ehlbeck leveled such criticism in a statement reacting to Democratic gubernatorial candidate Barbara Buono’s pick of union vice president Milly Silva as her running mate.

“Small business owners in New Jersey and elsewhere are deeply worried by the potentially devastating impact of the Affordable Care Act,” Ehlbeck said.

Payne said some business owners don’t understand the law’s contents. “It’s new, it’s frightening and they’re reacting in a way in which people that don’t understand will,” he said. “I think this is going to be a monumental sea change in this country. So many people for the first time in their lives will have healthcare they can afford.”

Affordability was a major concern of the small business owners who attended the forum.

Russell Lord, owner of South Orange used-car dealer Mil-Val Motors Inc., said the forum answered his foremost concern -- that he would face penalties for not insuring his employees. He won’t, because his business employs 21 workers, below the 50-employee threshold for offering coverage that will begin in 2015. But he said he doesn’t offer insurance to his workers because he can’t afford it and is worried that the ACA won’t make it any more affordable.

“It seems to me that come January 1, insurance is going to increase, which amplifies the problem of affordability,” Lord said.

Vincent Huggins, president of healthcare staffing company National Staffing Associates Inc. in West Orange, employees 200 workers, most whom are part time. He is concerned about how the federal law will calculate the number of “full-time equivalent” employees he has. He appreciated that Payne hosted the forum.

“It is a complicated situation here, but the more we hear about it, the more we learn,” Huggins said. “We have work to do, to try to figure out administratively, how we do this, and once it’s done, how we procure the services” to follow the law.